DANE  S.  McL.AUCHL.AN 

_    — 


THE  MAKING  OF  A  MERCHANT 


THER     PAPERS 
BY  HARLOW    N.  .  HIGINBOTHAM 


Very  truly  yours, 


J* 

^4?ii4/l/?ful4<v(s 


VECHTEN       &       ELLIS 

PHILOSOPHER     PRESS 


AT       THE 

W     A.     U 


SIGN 

S      A 


O  F 

U 


THE         GREEN         PINK        TREK 

WISCONSIN 


Of  this  edition  of  THE  MAKING  OF 
A  MERCHANT  one  hundred  copies 
were  privately  printed  at  THE  PHIL- 
OSOPHER PRESS  in  WAUSAU  WISCONSIN 
for  MR.  HARLOW  N.  HIGINBOTHAM. 


QO/31 


THE  MAKING  OF  A  MERCHANT  is 
here  reprinted  from  The  Saturday 
Evening  Post,  of  Philadelphia,  and 
to  the  editor  acknowledgement  is 
here  made  for  the  courtesy  of  per- 
mission to  reprint. 


TABLE    OF    CONTENTS. 


THE  MAKING  OF  A  MERCHANT 

LAYING  THE  FOUNDATION 11 

IN  BUSINESS  FOR  HIMSELF 24 

AN  EMPLOYER  OF  OTHERS 36 

THE  CREDIT-MAN 56 

LIFE  INSURANCE 69 

FIRE  INvSURANCE  . .  .  .80 


THE    MAKING    OF    A    MERCHANT 


LAYING    THE     FOUNDATION 

N  the  subject  of  the  mis- 
takes most  frequent 
among  boys  and  young 
men  entering  on  a  business 
life,  comment  of  any 
practical  value  is  certain  to  meet  with  one 
criticism  which  may  be  epitomized  in 
the  single  word  "commonplace!"  And 
why?  Because  these  faults  are  so 
common  that  they  are  impressed  on  the 
attention  of  every  large  employer  of 
labor,  particularly  in  commercial  lines,  and 
he  is  compelled  to  reiterate  them  with 
emphasis  and  tiresome  persistency.  If 
they  were  less  common,  less  universally 
recognized  and  uniformly  disapproved 
by  employers,  their  enumeration  would 
not  appeal  to  their  victims  as  common- 
place, stereotyped  and  uninteresting. 
11 


12    THE     MAKING    OF    A     MERCHANT 

Occasionally,  however,  a  boy  or 
young  man  of  sufficient  character  and 
receptivity  is  found  who  is  willing 
and  eager  to  profit  by  advice 
from  those  of  long  experience,  even 
though  it  may  be  given  in  painfully 
familiar  terms  and  may  sound 
sage,  tedious  and  "preachy."  It  is  in 
the  hope  that  arMeast  a  few  of  the 
younger  readers  of  THE  SATURDAY 
EVENING  POST  are  animated  by  this 
spirit  of  tractability  that  these 
suggestions  and  comments  are  made  by 
one  whose  views  are  the  result  of 
thirty-eight  years  of  experience  in 
unbroken  connection  with  an  enterprise 
that  has  had  many  changes  in  the 
personnel  of  proprietorship  and  now  has 
more  than  five  thousand  employees. 

In  the  course  of  that  service  he  has 
filled  various  positions,  from  the  very 
humblest  to  that  of  part  proprietor  and 
manager.  With  the  exception  of  his 
earliest  years,  all  this  period  of  labor  has 
brought  him  into  direct  personal  contact 
with  the  young  employees,  and  the 


LAYING       THE       FOUNDATION     13 

responsibilities  of  his  position  have 
compelled  a  daily  and  unremitting 
watchfulness  of  their  conduct  with  a 
view  to  determining  the  faults  and 
mistakes  which  most  beset  the  young 
adventurer  into  the  mazes  of  commercial 
activity. 

S  the  majority  of  business 
positions  to-day  are  filled  by 
men  who  entered  the  harness 
as  boys,  the  manner  in  which  a  boy 
looks  at  his  first  employment  is  of 
fundamental  importance.  Generally  he 
does  not  take  himself  or  his  duties  with 
sufficient  seriousness.  He  is  inclined  to 
think  that  he  is  "only  a  boy, "  and  that 
his  work  is  of  boyish  consequence. 
Nothing  could  be  further  from  the  real 
facts  than  such  an  impression.  To 
realize  this  it  is  only  necessary  to  go  into 
the  office  of  any  large  establishment — the 
business  heart  of  a  commercial  enterprise 
— and  observe  the  swarms  of  boys  that 
flit  between  the  desks  of  the  older 
workers. 


14     THE     MAKING    OF     A     MERCHANT 

Who  is  always  at  the  elbow  of  the 
executive  head  of  an  establishment  of 
this  kind?  A  boy!  He  comes  into 
closer  and  more  continuous  contact  with 
the  proprietor,  the  general  manager,  or 
the  department  head  than  any 
adult.  Because  he  is  "only  a  boy" 
he  is  party  to  private  conversations 
and  transactions  from  which  even 
the  "confidential  man"  might  be 
barred.  This  means  responsibility  and 
opportunity,  and  his  conduct  is,  there- 
fore, of  greater  personal  interest  and 
moment  to  the  business  executive  than 
he  is  generally  inclined  to  think. 

Boys  fail  to  satisfy  the  demands 
made  upon  them  more  through  lack  of 
promptness  and  punctuality  than  by 
any  other  reason.  Thousands  of 
dismissals,  rebuffs,  discouragements  and 
failures  at  the  beginning  of  a  career 
could  have  been  avoided  by  these  small 
workers  had  they  made  a  cardinal  point 
of  being  always  on  hand  in  their  proper 
places  during  every  moment  when 
subject  to  duty.  It  is  not  enough  that 


LAYING       THE       FOUNDATION     IS 

they  should  be  generally  at  their 
stations.  The  time  is  sure  to  come,  no 
matter  how  sparingly  they  allow 
themselves  the  indulgence  of  straying 
only  a  little  from  the  rigid  requirements 
of  office  rules,  when  they  will  be  suddenly 
wanted — and  will  be  found  wanting! 

Many  fall  into  the  habit  of  being  a 
few  rods,  or  perhaps  only  a  few  feet,  from 
the  spot  where  they  are  expected  to 
be.  This  means  that  the  busy  employer 
must  leave  his  desk  or  resort  to  a  little 
extra  effort  to  secure  their  attention. 
The  actual  inconvenience  may  seem 
trifling,  but  he  is  annoyed.  If  very 
charitable,  he  says  ''that's  the  boy  of 
it,"  and  patiently  gives  the  little  toiler 
another  chance.  But  the  boy  has  failed 
to  come  up  to  reasonable  requirements, 
and  suffers  accordingly  in  the  estimation 
of  the  man  who  depends  upon  him  for 
certain  service. 


16     THE     MAKING    OF    A     MERCHANT 

NOTHER  seemingly  petty 
fault  very  common  to  the 
younger  employees  is  the 
habit  of  watching  the  clock.  This  is 
little  short  of  infuriating  to  the  man 
who  is  genuinely  and  seriously  absorbed 
in  his  business.  It  tells  him  that  the 
spirit  of  time-serving  instead  of  the 
welfare  of  the  business  is  the  controlling 
force  in  the  work  of  such  an 
employee.  This  is  peculiarly  irritating 
to  the  man  who  has  a  thoughtful  and 
conscientious  grasp  of  the  serious  side  of 
business  life.  Any  large  employer  of 
labor,  particularly  in  office  positions,  will 
place  heartfelt  emphasis  on  the  advice: 
Let  the  clock  take  care  of  itself,  and 
show  a  disposition  to  be  useful  without 
regard  to  time  or  closing-bells!  This  is 
a  secret  by  which  a  boy  or  young  man  of 
even  mediocre  talents  may  win  the 
approval  of  those  whom  he  serves. 
"Anything  but  a  time-server!"  has  been 
the  exasperated  exclamation  that  has 
preceded  many  a  dismissal. 

Quickness    to    perceive    the    little 


LAYING       THE       FOUNDATION     17 

things  which  annoy  a  busy  executive  and 
promptness  in  removing  them  has 
secured  the  promotion  of  scores  of  boys 
and  young  men  who,  as  the  saying 
goes,  "have  their  wits  about  them." 
Proprietors  and  managers  of  large 
businesses  are  human  and  susceptible 
to  those  delicate  personal  attentions 
which  count  so  largely  in  home  and 
social  life.  And  the  fact  that  such  an 
attention  comes  from  a  boy,  and  amid 
the  hurry  of  business  and  the  commercial 
surroundings  of  an  office,  only  goes  to 
make  these  exhibitions  of  though tfulness 
more  acceptable,  pleasing  and  con- 
spicuous. 

As  to  the  matters  of  conduct  on  the 
part  of  the  employees  which  may  appear 
to  be  of  greater  moment,  it  is  worth 
while  to  lay  stress  on  the  characteristic 
of  decision — the  inclination  to  act  quickly 
on  individual  responsibility  and  stand  by 
the  consequences.  Rashness  may  be  less 
at  a  premium  in  commercial  than  military 
life;  but  timidity  is  as  much  to  be 
avoided  in  the  one  as  the  other  field  of 


18     THE     MAKING    OF    A     MERCHANT 

activity.  Better,  by  far,  make  an 
occasional  mistake  of  judgment  than  to 
halt  and  hesitate  over  the  routine  item 
of  business  and  consult  a  superior  on 
affairs  which  are  not  of  sufficiently 
unusual  a  character  to  demand  the 
special  exercise  of  executive  discretion 
and  authority. 


EADINESS  cheerfully  to  go 
anywhere  at  a  moment's  notice 
and  at  whatever  personal 
inconvenience,  to  remain  absent  from 
home  for  any  length  of  time  that  the 
exigencies  of  business  may  demand,  and 
to  make  the  interests  of  the  employer  his 
own,  is  a  most  appreciated  quality  in  an 
employee.  It  never  fails  to  secure 
appreciation.  A  turning-point  of  this 
kind  in  my  own  experience  so  aptly 
illustrates  this  observation  that  its 
introduction  here  may  be  pardonable. 

In  those  early  days,  travel  by  rail 
was  a  positive  hardship  compared  with 
present  conditions.  Sleeping-cars  were 
unknown,  and  trains  jolted  over  rough 


LAYING       THE       FOUNDATION     19 

roadbeds  at  snail  pace.  It  took 
twenty-four  hours  to  go  from  Chicago 
to  the  Missouri  River,  and  the  most 
active  young  man  was  not  anxious 
to  leave  his  home  and  suffer  the 
inconvenience  and  hard  knocks  of  such 
a  trip.  One  day,  however,  I  was  called 
into  Mr.  Leiter's  office  and  asked  if  I 
would  go  out  to  a  distant  prairie  town 
and  attempt  the  collection  of  a  bill  of 
fourteen  hundred  dollars  against  a 
country  merchant.  That  meant 
much  more  then  than  it  would 
now,  and  although  I  realized  the 
responsibility  of  the  mission,  and  its 
difficulties  and  hardships,  I  promptly 
and  cheerfully  accepted  the  proposal. 

From  the  moment  I  took  the  train 
I  had  no  other  thought  than  that  of 
accomplishing  the  object  for  which  I  had 
been  sent.  I  determined  to  get  that 
money  no  matter  how  long  I  had  to  stay 
for  it,  or  how  much  hard  work  or 
inconvenience  might  be  involved. 

Arriving  at  the  little  village,  I  found 
that  a  representative  of  another  wholesale 


20     THE     MAKING    OF    A     MERCHANT 

house,  to  which  the  merchant  was 
indebted  in  the  amount  of  four  thousand 
dollars,  had  been  there  before  me,  looked 
the  ground  over  and  left  on  the  next 
train,  abandoning  his  mission  as  hopeless 
for  the  time  being. 

I  was  not  "making  trains,"  and 
frankly  told  the  storekeeper  that  I  had 
come  to  stay  until  I  could  go  away  with 
the  firm's  money  in  my  pocket.  When 
he  grasped  the  situation,  he  disclosed  all 
his  private  business  affairs  to  me,  and  I 
found  he  owned  the  local  grain 
elevator,  the  hay  scales  and  other 
"outside  deals.  "  Then  I  secured  from 
him  an  option  on  these,  went  to  other 
men  in  the  town  and  disposed  of 
them.  This  reduced  his  account  by 
several  hundred  dollars. 

Then  I  made  a  list  of  the  accounts 
he  held  against  farmers  and  other 
residents,  secured  the  notes  of  the  most 
responsible  debtors,  and  discounted  their 
paper  at  the  bank.  Finally  I  took  back 
to  Chicago  a  number  of  pieces  of  valuable 
dress  goods  of  which  the  merchant  had 


LAYING       THE       FOUNDATION    21 

an  overstock.  All  these  things  satisfied 
the  claim  which  I  had  been  sent  to 
collect. 

It  was  a  proud  moment  for  me  when 
I  went  into  Mr.  Leiter's  private  office 
and  gave  an  account  of  my  week  in  the 
prairie  town  collecting  a  bad  debt.  That 
trip  had  a  strong  and  direct  influence  in 
my  advancement.  It  taught  me  a 
lesson,  and  if  it  may  do  as  much  for  any 
young  man  of  to-day  its  narration  is 
justified. 


CCASIONALLY  employees 
count  on  their  church  and 
Sunday-school  connections 
and  activities  as  a  means  of  impressing 
their  emyloyers  with  their  worthiness. 
This  is  a  misjudgment  of  human 
nature,  and  a  mistake.  Nor  is  this  view 
any  reflection  on  churches  or  religion — 
although  it  is  an  undeniable  fact  that 
to-day  a  man's  credit  is  not  strengthened 
by  his  church  alliances.  That  which 
injures  a  young  man's  standing  with  his 
employer  in  this  event  is  the  fact  that  he 


22    THE     MAKING    OF    A     MERCHANT 

seeks,  directly  or  indirectly,  to  make 
business  capital  of  his  religious 
affiliations.  It  is  not  what  a  man  believes 
or  professes,  but  what  he  is  and  does 
that  gives  him  standing  and  credit. 

A  man  may  make  a  fad  of  so  good 
a  thing  as  a  Sunday-school,  and 
it  matters  little  what  the  fad  followed  by 
an  employee  may  be,  the  moment  its 
existence  is  known  to  the  employer  the 
latter  regards  it  as  an  interloping  interest 
likely  to  distract  the  mind  from 
business.  This  feeling  may  be  selfish,  and 
perhaps  unjust,  but  its  recognition  is 
not  to  be  ignored  by  the  discreet 
employee. 

The  knowledge  that  an  employee 
belongs  to  a  club  that  is  not  distinctly 
beyond  his  means  is  not  a  detriment  to 
his  advancement.  Often  it  is  an 
advantage.  An  early  marriage,  unless 
unfortunate,  is  a  benefit  to  the  young 
salaried  business  man.  It  is  difficult  to 
conceive  of  an  employer  so  devoid  of 
human  feeling  that  he  will  not  take  into 
consideration  the  dependent  wives  and 


LAYING       THE       FOUNDATION    23 

children  in  dismissing  and  hiring 
employees.  If  compelled  to  choose 
between  a  single  and  married  man  of 
equal  merit,  the  conscientious  employer 
will  invariably  select  the  latter.  Generally 
he  will  even  "stretch  a  point"  in  favor  of 
the  man  of  family. 

The  young  man  who  saves  and 
invests  a  portion  of  his  earnings  always 
commands  the  respect  and  confidence  of 
his  employer.  While  building  and  loan 
associations  have  done  much  to  stimulate 
this  spirit  of  prudence,  I  am  convinced 
that  good  bonds  offer  a  better,  safer  and 
more  profitable  medium  of  savings 
investment. 


IN    BUSINESS    FOR    HIMSELF 


N  discussing  the  entry  of  a 
young  man  into  the  retail 
business  there  are  certain 
things  which  are  so  funda- 
mental that  they  must  be 
taken  for  granted.  Without  them  there 
can  be  no  permanent  or  substantial 
success  in  any  undertaking.  Among 
these  requirements  are  character, 
integrity,  and  a  fair  "business  head." 

The  first  rule  which  a  young 
merchant  going  into  the  retail  trade 
should  make  for  himself  with  heroic 
determination  is  that  of  doing  a  business 
consistent  with  his  capital.  Failure  to 
observe  this  rule  is  the  rock  on  which 
thousands  of  promising  commercial 
undertakings  have  gone  to  pieces. 
Whether  the  capital  put  into  the 

24 


IN     BUSINESS     FOR     HIMSELF    25 

enterprise  be  large  or  small,  its  size 
should  absolutely  govern  the  volume  of 
business. 

What  should  we  think  of  an 
architect  who  would  start  a  building  on 
a  foundation  forty  feet  square  and  then 
build  without  reference  to  its  limitations 
until  the  structure  completely  overhung 
the  underpinning  on  all  sides?  Yet  this 
is  precisely  what  thousands  of  young 
retail  merchants  throughout  the  country 
are  attempting  to  do.  They  try  to 
brace  up  their  top-heavy  structure  with 
the  timber  of  fictitious  credit.  These 
may  hold  it  in  fair  weather,  but  when 
the  period  of  storm  and  stress  comes — as 
come  it  surely  will — this  false  support 
will  come  crashing  down  and  the 
enterprise  tumble  with  it. 

My  individual  conviction  is  that  the 
only  way  in  which  a  retail  business 
can  be  conducted  on  lines  absolutely 
consistent  with  its  capital  is  on  the  cash 
basis.  For  this  reason  I  would  not 
advise  any  young  man  to  make  a  venture 
in  retail  trade  on  credit  lines.  It  is  too 


26     THE     MAKING    OF    A    MERCHANT 

much  like  working  in  the  dark.  Almost 
inevitably  the  accounts  grow  beyond 
your  control,  and  the  business  structure 
expands  at  the  top  while  the  foundations 
weaken. 

In  certain  communities  conditions 
seem  to  be  such  that  it  is  practically 
impossible  for  the  young  merchant  to 
introduce  the  strictly  cash  method  of 
doing  business.  In  this  event  he  has 
but  one  hope  of  success — that  is,  to 
watch  his  accounts  with  a  zealous 
vigilance  that  never  relaxes,  and  to  act 
with  promptness  and  decision  in  the 
matter  of  credits  and  collections.  This 
may  require  a  high  order  of  business  and 
moral  courage,  but  he  must  be  able  to 
do  it  if  he  would  avoid  wreck. 

In  his  dealings  with  his  creditors,  the 
wholesalers,  let  the  young  merchant  keep 
firmly  to  the  rule  of  incurring  no 
obligation  that  he  cannot  with  certainty 
meet  in  sixty  days.  Too  much  emphasis 
cannot  be  placed  on  his  connections  with 
the  wholesale  house  or  houses  from 
which  he  obtains  his  goods.  At  the 


IN     BUSINESS     FOR     HIMSELF     27 

very  beginning  of  his  venture  let  him  go 
to  the  credit  man  of  the  wholesale 
establishment  and  state  his  case  without 
reservation. 


O  thorough  and  searching  are 
the  means  employed  by  the 
big  wholesale  houses  to 
obtain  an  accurate  knowledge  of  the 
standing  and  affairs  of  their  debtors 
that  it  is  practically  hopeless  for  the 
latter  to  attempt  any  concealment  of 
unfavorable  conditions.  Again,  the 
credit  men  of  the  wholesale  houses  are 
the  keenest  men  in  the  business,  and 
their  judgment  of  human  nature  is  quick 
and  shrewd.  Then  it  should  be 
constantly  held  in  mind  that  the  honesty 
of  a  patron  seeking  credit  is  half  the 
battle,  and  that  their  confidence  is  won 
by  an  ingenuous  statement  of  affairs 
that  does  not  spare  the  one  who  is 
asking  for  credit. 

The  first  interview  of  the  young 
retail  merchant  with  the  credit  man  of 
the  wholesale  house  is  sometimes  a 


28    THE     MAKING    OF    A     MERCHANT 

trying  ordeal  in  which  many  uncomforta- 
ble questions  have  to  be  answered.  This 
may  incline  the  beginner  in  the  retail 
trade  to  avoid  the  credit  man  after  the 
initial  interview  has  been  successfully 
passed.  He  could  make  no  greater 
mistake  than  to  allow  this  association 
with  a  disagreeable  ordeal  to  alienate 
him  from  a  close  acquaintance  with  the 
credit  man.  To  the  contrary,  he  should 
improve  every  opportunity  to  strengthen 
and  build  up  a  confidential  relationship 
with  that  important  functionary  of  the 
wholesale  house.  Not  once,  but 
constantly,  should  he  acquaint  the  credit 
man  with  the  real  condition  of  his 
affairs,  and  should  ask  and  follow  the 
advice  of  this  counselor  on  all  important 
matters.  The  more  he  does  this  the 
better  will  be  his  standing  with  the 
house  and  the  safer  will  be  his 
course.  Advising  patrons  is  one  of  the 
most  important  duties  of  the  credit  man. 
I  place  great  emphasis  on  this  because 
its  importance  is  often  overlooked  by 
young  men  starting  in  the  retail  trade. 


IN     BUSINESS     FOR     HIMSELF    29 

Another  cardinal  point  in  the  success 
of  the  retail  merchant  is  that  of  having 
a  small  but  frequent  influx  of  new 
goods.  This  is  founded  on  a  universal 
trait  of  human  nature  which  craves 
"something  new."  There  is  a  subtle 
flattery,  practically  irresistible,  in  being 
shown  goods  that  have  not  been  exposed 
to  the  eyes  of  others  in  the  town. 

"Here  are  some  of  the  latest 
styles,"  says  the  retailer  as  he  reaches 
into  a  packing-box  and  takes  out  a  bolt 
of  dress  goods.  "They  have  just  come 
in,  and  no  one  has  seen  them.  You  may 
have  first  choice,  if  you  wish."  This 
argument  seldom  fails  to  effect  an 
immediate  sale.  And  even  if  it  does  not 
do  so,  the  woman  to  whom  this  courtesy 
is  shown  goes  away  with  the  impression 
that  the  young  merchant  is  wide  awake 
and  thoroughly  up  with  the  times. 

The  dealer  who  puts  in  a  small 
stock  at  the  start  and  keeps  constantly 
adding  thereto  with  fresh  but  limited 
invoices  has  an  immense  advantage  over 
the  tradesman  who  buys  in  large 


30    THE     MAKING    OF    A     MERCHANT 

quantities  and  does  not  freshen  his 
stock  for  six  months  at  a  time.  In  these 
days  women  are  the  most  numerous  and 
important  customers  of  the  retailer,  and 
they  do  not  like  to  see  the  same  old 
goods.  They  will  trade  where  they  can 
find  something  fresh  every  time  they 
call. 

LL  big  businesses  have  had 
small  beginnings.  I  do  not 
know  an  exception  to  this 
rule.  This  means  that  a  successful 
enterprise  must  have  a  normal,  sub- 
stantial and  legitimate  growth.  If  a 
young  merchant  finds  himself  in  quarters 
larger  than  he  at  first  demands,  he 
should  change  for  smaller  ones  or 
partition  off  a  portion  of  his  room  at  the 
back.  The  latter  is  better  than 
attempting  to  put  in  a  larger  stock  of 
goods  than  his  trade  really  demands  or 
his  resources  warrant.  It  is  also  better 
judgment  than  to  attempt  to  "spread" 
his  stock  over  a  large  space  for  the  mere 
purpose  of  filling  up. 


IN     BUSINESS     FOR     HIMSELF    31 

While  the  proprietor  should  be  the 
first  at  the  store  in  the  morning  and  the 
last  to  leave  at  night,  and  should  be 
always  ready  to  do  anything  that  he 
would  ask  his  humblest  clerk  to  do,  he 
should  always  remember  that  he  must 
do  the  headwork  of  the  business.  He 
can  hire  a  boy  to  candle  eggs,  sweep 
out,  and  deliver  goods,  but  if  he  does 
not  do  the  thinking  and  planning  it  will 
not  be  done.  That  is  something  that 
the  most  faithful  and  conscientious  clerk 
cannot  do  for  him.  If  he  allows  the 
physical  part  of  the  work  so  to  encroach 
on  his  time  and  energies  that  he  does 
not  find  opportunity  for  a  frequent  and 
thoughtful  survey  of  his  business,  he 
makes  a  great  and  common  mistake.  This 
principle  is  stated  forcibly,  if  uncouthly,  in 
the  old  expression,  "Let  your  head  save 
your  heels. ' ' 

The  young  merchant  who  takes 
time,  at  regular  intervals,  to  make  a 
close  summary  and  analysis  of  his 
accounts,  and  takes  his  bearings  so  that 
he  knows  precisely  his  position  on  the 


32    THE     MAKING    OF    A     MERCHANT 

sea  of  business,  is  the  man  who  will 
succeed.  In  other  words,  the  mental 
part  of  the  business  is  its  most  important 
feature.  However,  I  hold  that,  at  more 
or  less  frequent  intervals,  the  storekeeper 
should  personally  do  every  task  about 
the  establishment  for  the  sake  of 
influence  and  example. 

Let  him  take  the  broom  from  the 
hand  of  the  boy  and  show  the  latter 
how  to  "sweep  out"  without  stirring  up 
a  dust  or  leaving  dirt  in  the  corners;  this 
will  give  him  added  respect  in  the  eyes  of 
the  boy,  and  the  store  will  thereafter  be 
cleaner  by  reason  of  the  example;  and  so 
with  every  other  task,  no  matter  how 
trivial  or  humble. 

Then  the  young  merchant  will  do 
well  always  to  bear  in  mind  that  courtesy 
is  the  biggest  part  of  his  capital.  This 
does  not  mean  that  he  should  be 
obsequious  or  fawning,  but  simply  and 
invariably  attentive  to  all  who  enter  his 
place  of  business. 


IN     BUSINESS     FOR     HIMSELF    33 


HE  matter  of  advertising  is  not 
an  unimportant  detail.  In  the 
local  newspaper  the  young 
retailer  may  wisely  use  a  limited  amount 
of  display  advertising  space.  This  will 
be  most  advantageously  occupied  by  a 
simple,  dignified  and  modest  announce- 
ment of  new  goods.  Like  his  stock,  the 
subject  matter  of  his  advertisement 
should  be  kept  fresh  by  constant 
change.  It  should  also  have  the 
individual  quality  both  in  its  wording, 
form  and  type — something  that  expresses 
the  personal  good  taste  of  the  advertiser. 
There  is  no  doubt  that  a  neat 
circular  or  folder  sent  personally  to 
patrons  is  a  strong  method  of  advertis- 
ing. Such  announcements  may  be 
delivered  by  messenger  or  distributed 
through  the  mails.  Best  of  all  is  the 
neat,  personal  note  written  to  the 
merchant's  best  customers,  calling 
attention  to  fresh  arrivals  of  goods.  The 
spare  moments  of  a  young  merchant  may 
be  put  to  a  far  less  effective  use  than  this 
writing  of  individual  advertising  letters. 


34    THE     MAKING    OF    A    MERCHANT 

It  is  scarcely  possible  to  put  too 
much  emphasis  on  attractive  window 
displays.  Here,  again,  the  element  of 
constant  freshness  plays  an  important 
part.  The  displays  should  be  frequently 
changed,  and,  while  striking,  they  should 
never  fail  to  have  the  quality  of  good 
taste.  Good  statuary,  pictures,  curios, 
and  art  objects  of  every  kind  may  be 
used  to  unfailing  advantage  in  dressing 
windows,  and  they  always  command  the 
attention  and  admiration  of  women.  It 
pays  the  enterprising  merchant  to  secure 
the  loan  of  works  of  art  for  this  purpose 
— and  they  are  not  difficult  to  obtain. 

In  looking  after  all  these  details, 
which  are  of  importance  in  the  general 
result,  the  young  retailer  should  not  fail 
to  keep  a  proper  perspective  of  his 
business  as  a  whole.  He  should  know 
just  where  he  is  sailing,  and  be  sure  that 
he  is  not  drifting.  In  this  way  he  will 
become  a  safe  pilot,  and  will  bring  his 
enterprise  into  the  harbor  of  success  and 
independence.  And  the  prosperous 
retail  merchant  is  a  very  independent  and 


IN     BUSINESS     FOR     HIMSELF    35 

respected  member  of  the  community  in 
this  country,  where  the  honest  tradesman 
commands  the  regard  to  which  he  is 
entitled. 


AN    EMPLOYER    OF    OTHERS 


N  a  preceding  paper  I 
attempted  some  practical 
suggestions  to  the  end  of 
indicating  how  the  young 
employee  may  secure  favor 
and  advancement  with  his  employer. 
There,  only  the  conduct  of  the  servant 
was  considered,  and  nothing  was  said 
regarding  the  responsibilities  of  the 
master.  My  convictions  concerning  the 
latter  are  so  strong  that  I  can  scarcely 
leave  the  discussion  of  any  phase  of 
mercantile  life  without  an  expression  of 
opinion  on  this  vital  point. 

A  very  large  proportion  of  the 
Americans  who  have  builded  great 
businesses  and  made  their  names  familiar 
to  a  large  public  confess  that  they  find 
their  chief  pleasure  in  following  the  daily 

36 


AN      EMPLOYER      OF      OTHERS    37 

routine  of  traffic  at  a  time  when  they 
have  no  longer  any  financial  necessity  for 
so  doing.  For  this,  we  as  a  nation  are 
sharply  criticised  by  our  European 
friends,  who  declare  that  in  the  absorbing 
race  for  success  we  forget  how  to  enjoy 
the  fortunes  after  they  have  been 
secured.  These  critics  say  the  most 
pitiable  spectacle  in  the  world  is  the 
millionaire  who  becomes  a  slave  to  the 
habit  of  money-getting  and  cannot  take 
himself  from  his  sordid  tasks.  To  a 
degree  this  observation  is  sadly  true,  and 
America  has  very  many  men  of  great 
fortune  who  appear  to  have  small 
capacity  for  any  pleasure  other  than  that 
of  increasing  their  wealth.  But  there  is 
another  side  to  the  picture  of  the  wealthy 
business  man  who  sticks  to  his  desk  long 
after  his  fortune  is  greater  than  he  could 
reasonably  spend  during  the  remainder 
of  his  lifetime. 

It  would  be  well-nigh  impossible  to 
convince  men  of  a  certain  class  that  very 
many  of  these  men,  who  have  no 
necessity  to  work,  keep  to  their  tasks 


38    THE     MAKING    OF    A    MERCHANT 

from  a  sense  of  duty  to  their  fellow- men 
— and  most  particularly  to  their  own 
employees.  This,  however,  is  true  in 
scores  and  hundreds  of  instances.  If 
the  secret  motives  of  the  business  men 
who  have  been  scoffed  and  sneered  at  as 
mercenary  and  miserly,  because  they  did 
not  retire  to  a  life  of  ease  and  idleness 
when  their  wealth  overtopped  the 
"dreams  of  avarice,"  could  be  under- 
stood, it  would  be  seen  that  a  very  large 
proportion  of  them  have  kept  steadily  at 
their  self-appointed  tasks  for  the  sake  of 
the  small  armies  of  men,  women  and 
children  depending  for  the  necessaries 
of  life  upon  the  safe  conduct  of 
the  great  enterprises  managed  by  these 
men.  I  think  this  spirit  is  particularly 
characteristic  of  those  who  have  made 
great  fortunes  in  mercantile  pursuits 
rather  than  in  speculative  fields. 


HE    reason  for  this  sense   of 
responsibility     on     the     part 
of    wealthy   merchants  is  not 
difficult  to  find.     Generally  their  fortunes 


AN      EMPLOYER      OF      OTHERS     39 

have  been  of  comparatively  slow 
growth,  and  in  the  process  of  their 
building  the  "merchant  princes,"  as  the 
newspapers  describe  them,  are  brought 
into  close  and  long  association  with  their 
employees,  and  would  be  scarcely  human 
if  they  did  not  find  themselves  deeply 
interested  in  the  welfare  of  the  men  who 
served  their  interests,  even  though  it  be 
a  service  for  hire.  Many  a  conscientious 
merchant  worth  millions  has  said  to 
himself,  and  possibly  to  his  nearest 
friends,  "I'd  like  to  let  go  of  work 
entirely,  take  a  long  trip  and  make  a 
business  of  pleasure-seeking,  but  I'm 
interested  in  my  men  and  have  plans  for 
their  good  that  can  only  be  carried  out 
after  careful  foundations  have  been 
laid.  So  I'm  going  to  stick  to  work 
until  I  can  see  things  so  firmly  established 
that  it  will  not  cause  a  ripple  of  disturb- 
ance when  I  do  step  out.  And  perhaps 
I  shall  get  quite  as  much  enjoyment  in 
doing  this  as  in  searching  for  pleasure 
outside  of  work. ' ' 

This   attitude  is   certainly   that  of 


40    THE     MAKING    OF    A     MERCHANT 

many  wealthy  merchants  and  other  large 
employers  of  labor,  and  if  their  employees 
could  only  appreciate  this  fact  it  would 
make  the  service  of  both  a  delight,  and 
would  change  the  aspect  of  the  labor 
world.  On  the  other  hand,  it  must  be 
admitted  that  not  all  large  employers 
are  sufficiently  unselfish  to  take  this 
view  of  their  opportunities ;  but  of  such 
it  must  be  said  that  they  do  not  have  a 
realizing  sense  of  their  responsibilities. 

Many  avenues  of  helpfulness  open 
to  the  manufacturer  who  desires  to  deal 
helpfully  and  generously  by  his  employees 
are  closed  to  the  merchant,  for  the 
reason  that  the  employees  of  the  latter 
are  generally  widely  scattered  through- 
out the  city  in  which  the  mercantile 
enterprise  is  located.  On  the  other 
hand,  the  employees  of  a  manufacturing 
concern  usually  segregate  and  comprise 
a  distinct  community  of  their  own.  This 
makes  it  possible  for  the  manufacturer 
to  build  halls,  churches,  libraries,  schools, 
gymnasiums,  theatres  and  club  houses 
to  be  used  exclusively  by  the  men  and 


AN      EMPLOYER      OF      OTHERS     41 

women  on  his  pay-roll.  The  merchant 
cannot  do  this  for  the  reason  that  his 
employees  are  dispersed  throughout  the 
entire  city. 

More  than  this,  the  working  force 
of  a  great  mercantile  establishment 
represents  nearly  every  social  class. 
Those  of  highest  rank  and  holding 
executive  positions  are,  perhaps,  members 
of  the  same  clubs  with  the  proprietors 
of  the  house,  and  move  in  fashionable 
circles.  Then  come  others  of  varying 
social  status.  In  the  main  they  are 
necessarily  persons  of  more  or  less 
education,  and  could  not,  therefore,  be 
considered  en  masse  in  any  plan  for 
advancement  which  would  necessitate 
their  meeting  together  or  sustaining  a 
common  social  relationship. 


HIS  difficulty,  however,  does 
not  shut  the  kindly  disposed 
merchant  from  benefiting  and 
helping  his  employees.  There  are  many 
things  he  may  do  in  this  direction,  and 
the  first  and  most  important  one  is  that 


42    THE     MAKING    OF    A     MERCHANT 

of  consistently  following  a  line  of 
conduct  calculated  to  make  every 
employee,  from  the  least  to  the  greatest, 
feel  that  so  long  as  he  is  faithful  in  the 
discharge  of  his  duties  and  reasonably 
competent  he  will  not  lose  his  place  in 
the  employ  of  the  house.  Nothing  in 
the  world  can  build  up  so  strong  a  sense 
of  loyalty  and  devotion  on  the  part  of 
the  working  force  of  any  establishment 
as  this  feeling.  Nor  will  any  amount  of 
fear,  discipline  or  driving  get  so  much 
work  and  as  good  work  out  of  employees 
as  the  knowledge  that  their  tenure  of 
service  is  secure,  and  that  in  misfortune 
they  will  be  taken  care  of  in  a  friendly 
and  humane  manner.  This  feeling  will 
go  further  than  high  salaries — although 
in  saying  this  I  do  not  take  the  position 
of  urging  it  as  a  possible  subterfuge  by 
which  the  payment  of  fair  wages  may  be 
avoided.  It  should  be  adopted  as  a 
business  rule  because  it  is  right,  and  it 
will  be  found  most  excellent  policy  when 
pursued  from  this  motive. 

The  best  capital  that  any  employer 


AN      EMPLOYER      OP      OTHERS    43 

can  have  is  the  knowledge  and  apprecia- 
tion on  the  part  of  his  employees  that 
he  is  genuinely  and  sincerely  interested 
in  their  welfare;  that  he  really  cares  for 
them  and  their  prosperity.  This  applies 
particularly,  it  seems  to  me,  in  the 
mercantile  business,  where  a  very  large 
proportion  of  the  men  are  salesmen,  and 
their  efficiency  is  dependent  to  a  sensitive 
degree  upon  their  feelings — their  loyalty, 
energy,  and  hope  of  substantial  appre- 
ciation and  reward.  I  have  never  found 
any  way  of  accomplishing  this  result 
other  than  that  of  keeping  in  close 
personal  touch  with  the  entire  working 
force  of  the  house.  It  would  be  a 
matter  of  sincere  regret  to  me  to  learn 
that  a  single  employee  of  my  establish- 
ment did  not  feel  and  understand  that  he 
could  come  to  me  in  any  personal  trouble 
or  exigency  of  a  serious  nature  and  be 
cheerfully  granted  an  audience,  and  that 
the  boy  receiving  the  lowest  wages  should 
be  as  welcome  as  the  man  holding  a  posi- 
tion of  great  responsibility.  To  establish 
this  feeling  thoroughly  in  an  institution 


44     THE     MAKING    OF    A     MERCHANT 

employing  more  than  two  thousand 
persons  has  cost  many  hours  of  time;  but 
my  experience  warrants  the  statement 
that  any  merchant  who  is  a  large 
employer  of  labor  will  find  time  thus 
spent  the  most  profitable  and  productive 
that  his  calendar  records. 


HE  knowledge  that  he  will  be 
"taken  care  of"  in  sickness 
and  calamity  as  well  as  in 
health  does  more  to  keep  the  employee 
steady  and  contented  in  his  service  than 
all  other  influences.  When  the  man 
knows  that,  in  the  event  of  illness,  no 
matter  how  long  continued,  his  pay  will 
be  cheerfully  sent  him,  he  needs  no 
argument  to  induce  him  to  remain  with 
such  an  employer,  even  if  offered  higher 
salary  or  more  brilliant  inducements 
elsewhere.  And  if  the  employer  keeps 
so  close  to  his  men  that  he  is  able  to 
visit  them  when  they  are  sick  without 
making  the  visit  a  palpable  and  deliber- 
ate display  of  patronage  and  condescen- 
sion, he  will  command  almost  un- 


AN      EMPLOYER      OP      OTHERS     45 

bounded   loyalty  from  the   men  on   his 
pay-roll. 

Another  powerful  stimulant  to  the 
devotion  of  employees  is  the  pension 
system  which  is  in  force  in  mercantile 
life  to  a  much  greater  extent  than  is 
generally  understood. 

The  selfish  value  to  a  great  com- 
mercial establishment  of  taking  care  of  its 
employees,  of  showing  interest  in  them, 
of  stimulating  them  to  advancement 
and  of  making  them  feel  secure  in  their 
positions  has  been  illustrated  by  some 
notable  examples  of  those  who  pursued 
an  opposite  course.  One  of  the 
largest  -mercantile  houses  in  the 
country  adopted  as  a  settled  policy  the 
unwritten  law  that  when  a  man  ad- 
vanced to  a  certain  degree  of  intimacy  in 
the  knowledge  of  the  larger  affairs  of  the 
concern  his  services  were  to  be  dispensed 
with.  In  other  words,  the  proprietor 
determined  that  no  person  besides  him- 
self should  have  a  grasp  of  the  business 
in  its  entirety.  As  soon  as  his 
lieutenants  acquired  what  he  regarded 


46    THE     MAKING    OF    A     MERCHANT 

as  a  dangerous  amount  of  knowledge  he 
discharged  them.  And  with  what 
result?  He  educated  men  for  high 
places  in  the  service  of  his  competitors 
and  put  a  most  effectual  damper  on  the 
spirit  of  loyalty.  His  men  realized  it 
was  not  safe  for  them  to  "know  too 
much."  Because  of  his  strong  person- 
ality and  his  genius  for  finance  he  was 
able  to  prosper  in  spite  of  this  weakness 
in  his  system ;  but  the  instant  his  own 
hand  was  stricken  from  the  guidance  of 
the  affairs  of  his  house  the  spirit  of  his 
own  distrust  of  his  employees  swept  into 
practical  wreck  the  great  enterprise 
which  he  had  builded.  There  seems  to 
be  little  reason  to  doubt  that  had  he 
pursued  an  opposite  policy,  and  put  a 
premium  on  high  executive  ability  and  a 
comprehensive  grasp  of  the  business,  his 
house  might  have  perpetuated  his  name 
for  several  generations  instead  of  drop- 
ping from  sight  with  almost  incredible 
swiftness.  The  great  cohesive  power  of 
a  mercantile  establishment  is  the  spirit 
of  confidence  between  employer  and 


AN      EMPLOYER      OF      OTHERS     47 

employed.     It    is    indeed    necessary  for 
success. 


HERE  are  many  excellent 
ways,  besides  those  I  have 
already  mentioned,  by  which 


the  employing  merchant  may  arouse  the 
energies  and  inspire  the  devotion  of 
those  in  his  employ.  One  is  by  paying 
salaries  that  are  admittedly  large.  In 
the  trade,  service  in  such  a  house  is 
regarded  as  a  prize  to  be  vigorously 
sought.  The  assigning  of  a  direct 
interest  in  the  house  is  another  effective 
way  in  which  to  reward  what  in  military 
terms  would  be  classed  as  ' '  distinguished 
service. ' ' 

I  am  familiar  with  an  instance  of 
this  kind  wherein  the  proprietor  of  an 
extensive  business  wished  to  make  one 
of  his  principal  employees  an  actual 
shareholder.  The  young  man  had  no 
capital  to  invest,  and  could  not  well 
spare  anything  from  his  current  earnings 
for  investment.  He  was  charged  on  the 
books  of  the  concern  with  fifteen 


48    THE     MAKING    OF    A     MERCHANT 

thousand  dollars  in  cash  and  credited 
with  that  amount  of  capital.  Of  course 
he  was  also  charged  interest  at  the  rate 
of  six  per  cent.  Against  this  was  a 
credit  of  profits  or  earning  of  twenty 
per  cent.  This  made  a  net  balance  in 
the  young  man's  favor  of  two  thousand 
one  hundred  dollars,  which  was  applied 
on  the  charge  of  his  capital  of  fifteen 
thousand  dollars. 

The  years  in  which  this  snug  capital 
was  paying  for  itself  passed  so  quickly 
that  the  happy  young  man  was  scarcely 
aware  of  their  flight.  The  fund  not 
only  exerted  a  strong  influence  on  the 
young  man,  but  on  the  other  employees 
of  the  establishment. 

The  method  of  bestowing  a  "work- 
ing interest"  is  probably  familiar  to 
all.  It  consists  of  what  to  all  intents 
and  purposes  is  the  bestowal  of  a 
fictitious  interest  in  the  business.  The 
favored  employee  is  credited  with  a 
certain  percentage  of  the  net  profits  for 
the  year — this  in  addition  to  a  salary 
sufficient  for  living  expenses.  It  does 


AN      EMPLOYER      OF      OTHERS    49 

not  matter  so  much  in  what  form 
the  employer  makes  this  award  to  special 
worthiness,  so  long  as  he  makes  it  and 
his  employees  know  that  it  is  to  be  made 
from  time  to  time.  In  truth  and  in 
fact,  the  interests  of  the  employer  and 
employed  are  mutual,  and  everything 
which  goes  to  make  this  more  apparent 
is  to  be  welcomed. 


HERE  are  two  or  three  points 
briefly  and  casually  touched 
upon  in  my  former  articles  that 
I  am  loath  to  leave  without  a  word  of 
special  emphasis.  In  a  very  large 
degree,  whatever  of  success  I  have  been 
able  to  achieve  in  the  mercantile  field  is 
due  to  reaching  out  for  new  responsibil- 
ities and  doing  things  without  being 
told.  The  man  who  rejoices  the  heart 
of  the  head  of  a  great  business  is  the 
man  who  sees  something  to  do  and  does 
it  without  asking  any  questions.  Of 
course  I  do  not  mean  by  this  that  any 
employee  should  recklessly  usurp  the 
duties  or  responsibilities  of  another  or 


50     THE     MAKING    OF    A     MERCHANT 

of  his  employer;  but  within  the  bounds 
of  reason  he  should  be  extending  the 
radius  of  his  authority  and  responsibil- 
ity, and  lifting  that  much,  as  it  were, 
from  the  shoulders  of  his  employer.  The 
latter  is  quick  to  see  the  force  and  value 
of  such  a  servant  and  inwardly  remarks: 
"Here  is  a  man  who  not  only  acts,  but 
thinks  for  me.  He  sees  through  the 
eyes  of  my  own  self-interest,  and  initiates 
and  executes  in  my  stead. " 

The  other  point  which  I  especially 
desired  to  emphasize  is  that  of  unfailing 
and  irrepressible  courtesy  to  every  one, 
and  upon  all  occasions.  This  should  be 
a  matter  of  principle  and  native  good- 
breeding.  But  if  it  can't  be  spon- 
taneous and  of  the  heart,  let  it  be 
nourished  as  policy,  and  from  the  cold 
and  calculating  consideration  that  in 
this  country  it  is  impossible  to  tell  how 
soon  the  humblest  person  may  change 
to  a  place  of  great  influence  and 
importance.  Let  any  business  man  of 
long  experience  go  over  the  surprises  of 
this  nature  which  he  has  encountered 


AN      EMPLOYER      OF      OTHERS     51 

and  the  list  will  be  surprising.  In  fact, 
the  man  who  has  not  learned  a  few 
lessons  in  this  particular  line  through 
sad  and  humiliating  experiences  is 
fortunate. 


HE  credit  department  is  gen- 
erally the  field  most  attractive 
to  the  young  man  who  is 
ambitious  to  make  a  figure  in  mercantile 
life.  Here  is  the  arena  in  which  a  talent 
for  financiering  may  be  displayed  every 
work-day  of  the  week,  and  the  em- 
ployee may  earn  a  year's  salary  by 
a  clever  turn  or  the  prompt  exercise 
of  judgment  and  firmness.  What  won- 
der, then,  that  the  young  man  who 
feels  himself  equipped  by  nature  and 
taste  for  the  exploits  of  commercial 
finance — for  the  thinking  and  planning 
part  of  mercantile  life — longs  to  test  his 
mettle  at  the  credit-desk.  There  every 
transaction  has  its  beginning  and  its 
end,  its  initial  sanction  and  its  formal 
termination.  To  the  credit-man  and 
his  assistants  come  the  merchants  of 


52    THE     MAKING    OF    A    MERCHANT 

other  cities — men  of  recognized  power 
and  influence  in  their  communities — and 
stand  before  him  to  be  judged  as  to 
their  integrity,  their  business  capacity, 
their  energy,  their  financial  soundness 
and  resources,  and  their  character  in 
general. 

No  judge  on  the  bench  faces  so 
difficult  a  problem  as  that  which  con- 
fronts the  credit -man.  If  the  latter 
fails  to  be  absolutely  judicial  in  his 
decision  his  hopes  of  success  must  be 
small  indeed.  On  the  other  hand,  he 
is  not  so  protected  from  personal 
influence  as  is  the  judge.  The  customer 
makes  his  own  appeal  for  credit  or  its 
extension,  and  leans  on  the  desk  of  the 
credit-man,  looking  the  latter  full  in  the 
eye  as  he  does  so.  Perhaps  this  cus- 
tomer is  known  to  be  a  personal  friend 
of  the  proprietor,  and  the  credit-man  is 
in  honor  bound  to  conceal  the  reasons 
leading  to  the  denial  of  the  request. 
This  makes  refusal  very  hard  to  give,  but 
there  is  only  one  safe  road  for  the 
credit-man  to  follow  in  all  instances:  he 


AN      EMPLOYER      OF      OTHERS    53 

must  be  more  judicial,  if  possible,  than 
the  righteous  judge,  and  take  nothing 
save  his  own  best  judgment  into 
account. 


ORE  than  this,  he  must  be 
quick  to  catch  at  straws  of 
circumstance  and  read  their 
significance.  This  can  best  be  illus- 
trated from  a  personal  experience.  A 
man  who  had  a  large  line  of  credit  with 
us,  and  was  considered  the  "big  man" 
in  the  mercantile  circles  of  his  own  city, 
came  to  request  the  extension  of  a  note. 
Just  previous  to  his  appearance  at  my 
desk  I  had  been  in  his  city  and  took 
occasion  to  get  shaved  in  the  barber 
shop  underneath  his  store.  Incident- 
ally, I  chanced  to  make  a  passing 
reference  to  the  place  above  us,  and  the 
barber  shook  his  head  and  remarked: 

"They're  not  throwing  the  goods 
down  on  the  counters  the  way  they 
used  to.  The  captain  of  the  ship  seems 
to  be  pushing  the  Sunday-school  con- 
vention business  more  than  the  dry- 


54     THE     MAKING    OF    A     MERCHANT 

goods  trade.  He's  away  a  great 
deal,  and  leaves  things  to  his  clerks 
considerable." 

Although  I  was  comparatively  new 
to  the  credit-desk,  and  was  acting  in 
place  of  the  credit  chief,  who  was  in 
Europe,  I  declined  to  extend  the 
note.  My  customer  was  greatly  aston- 
ished at  this  development,  and  reminded 
me  that  if  the  regular  credit  chief  were 
there  the  favor  would  be  instantly 
granted.  I  knew  this  was  altogether 
probable;  but  I  believed  the  man  had 
reached  a  period  of  financial  unsound- 
ness,  and  my  duty  was  clear.  There 
was  nothing  for  me  to  do  but  quietly 
insist  on  a  settlement.  This  I  secured. 
Shortly  afterwards  the  man  failed,  owing 
a  competitor  of  our  establishment 
ten  thousand  dollars.  I  had  caught 
the  right  straw  and  saved  the  house 
thousands  of  dollars  by  standing  firmly 
to  my  conviction. 

Hundreds  of  parallel  instances  have 
come  within  my  experience,  and  all 
emphasize  the  point  that  the  credit-man 


AN      EMPLOYER      OF      OTHERS    SS 

must  be  as  judicial  as  Justice,  as  firm  as 
a  rock,  and  sensitive  to  the  thousand 
straws  of  circumstance  which  show  the 
drift  of  the  financial  current.  These 
requirements  may  appear  very  exacting 
and  almost  impossible.  Certainly  the 
number  of  men  who  embody  this 
combination  of  qualities  is  not  large. 
On  the  other  hand,  the  young  man  with 
genius  or  even  talent  for  credits  has 
before  him  a  career  rich  in  possibilities 
and  rewards. 


THE       CREDIT-MAN 


N  the  keeping  of  the  credit- 
man  rests  in  a  large  measure 
the  commercial  interests  of 
a  vast  and  rapidly  increas- 
ing population. 
That  you  may  the  better  under- 
standtheimportanceof  the  situation,  and 
the  better  comprehend  the  magnitude  of 
the  business  committed  to  your  keeping,  I 
am  going  to  ask  you  in  your  imagina- 
tion to  draw  a  circle  having  a  radius  of 
only  five  hundred  miles,  with  Chicago 
as  its  center.  Within  that  circle, 
practically  within  a  night's  ride,  are 
more  than  twenty-five  million  happy, 
contented,  and  prosperous  people.  The 
fertile  soil  of  the  area  thus  circumscribed 
is,  by  the  favor  of  Almighty  God,  aided 

Delivered  at  the  third  annual   banquet  of  the  Chicago  Credit- 
men's  Association,  Wednesday  evening,  May  17, 1899. 

56 


THE          CREDIT-MAN        57 

by  the  hand  of  man,  made  to  produce 
more  that  goes  to  sustain  human  life 
than  any  other  equal  number  of  square 
miles  on  the  face  of  the  globe,  at  any 
period  of  its  history. 

This  charmed  circle  teems  with 
busy  work-shops  and  is  rich  in  all  that 
goes  to  make  material  prosperity.  The 
people  are  law-abiding,  and  at  peace 
with  their  neighbors  and  all  the  world. 

I  believe  that  within  this  circle 
there  obtains  a  higher  code  of  commer- 
cial ethics  than  has  ever  before  been 
found  to  exist  in  any  similar  situation. 
Consider  that  this  civilization  has  been 
almost  entirely  created  within  the  life- 
time of  the  living;  consider  that  there 
has  been  injected  into  it  people  from  all 
quarters  of  the  globe,  bringing  with 
them  all  shades  of  belief  and  doctrine ; 
that  all  these  in  a  few  decades  should 
have  been  brought  into  a  harmonious 
relation  is  one  of  the  wonders  of  our  time. 

The  business  with  which  you  have 
to  deal,  although  not  confined  to  this 
circle,  is  largely  within  it. 


58    THE     MAKING    OF    A     MERCHANT 

I  have  taken  the  liberty  of  placing 
before  you  this  picture  in  order  that 
we  may  the  better  understand  our  duty, 
both  as  it  relates  to  the  present  and 
future.  By  every  thought,  act,  and 
transaction  of  our  lives  let  us  individu- 
ally and  collectively  strive  to  inculcate  a 
still  higher  code,  so  that  this  civilization 
of  which  I  am  speaking  shall  have  the 
full  benefit  of  the  very  best  that  is  in  us. 


UTSIDE  of  the  specific  duty 
imposed  upon  him  by  his 
employment,  a  creditman  in 
these  days  of  ours  occupies  a  most 
important  position  in  society.  The 
credit-man  not  only  extends  aid  for  the 
prosecution  of  business  affairs,  but  he 
has  within  his  keeping  the  moral 
reputation  of  men.  The  word  "credit" 
broadly  applied  means  confidence  in 
worth,  and  applied  to  its  business  use 
means  confidence  in  moral  worth  as  well 
as  in  commercial  worth. 

There  is  no  position  I  can  recall  in 
the  business  world  that   requires  to  so 


THE          CREDIT-MAN        59 

extreme  a  degree  both  a  sympathetic 
and  an  unsympathetic  nature.  In  order 
to  properly  weigh  the  merit  of  a  man's 
request  for  credit,  an  individual  must  be 
able  to  extend  his  sympathies  to  the 
applicant  sufficiently  to  thoroughly  un- 
derstand all  the  causes  that  led  up  to 
the  application,  and  all  the  reasons  that 
justify  the  request.  Having  thoroughly 
placed  himself  in  sympathetic  relation- 
ship, he  must  then  at  once  exclude  his 
sympathies,  and  in  a  cool,  calm,  unpre- 
judiced, businesslike  and  unsympathetic 
frame  of  mind,  determine  upon  commer- 
cial reasoning  whether  a  request  for 
credit,  or  consideration  in  business,  may 
be  extended  in  justice  to  the  concern  he 
represents. 

The  commercial  credit  of  a  business 
man  is  not  only  largely  in  the  hands  of 
the  credit-man,  but  his  moral  character 
as  well;  for  to  be  denied  credit  in 
business  presupposes  a  man  whose  moral 
condition,  viewed  from  a  business 
standpoint  at  least,  is  impaired. 

The  relation  of  a  credit -man  to  his 


60    THE     MAKING    OF    A    MERCHANT 

employer  should  always  be  dutiful.  He 
should  know  and  appreciate  the 
temper,  the  method,  and  the  ambition 
of  his  employer.  So  far  as  he  is  able  to 
do  so  without  self-reproach,  he  should 
subordinate  his  views  to  those  of  his 
employer.  Disagreement  with  respect, 
advice  with  temperance,  but  subordina- 
tion after  all,  or  resignation. 

In  observing  the  lives  of  those  men 
who  are  recognized  as  superior  among 
credit-men  in  this  country,  I  am 
impressed  with  the  fact  that  in  nearly 
every  instance  their  success  has  been  due 
to  their  thoroughness  and  to  their 
singleness  of  purpose.  They  have  been 
satisfied  in  the  earlier  stages  of  their 
career  to  take  one  assignment  of  duty 
and  perform  it — to  have  finished  one 
task  before  taking  on  another. 

Another  strong  characteristic  of  these 
men  has  been  the  directness  of  their 
application  to  duty.  You  may  have 
read  a  little  brochure  by  Hubbard,  *  'The 
Message  to  Garcia. ' '  It  tells  of  how  the 
man  Rowen  took  the  word  from  the 


THE          CREDIT-MAN        61 

White  House  to  Garcia  into  the  interior 
of  Cuba.  The  strong  part  of  this 
exploit  rests  on  the  recitation  that  the 
administration  gave  to  this  young 
man,  "A  message  to  be  delivered  under 
great  difficulty  and  with  exceeding 
danger  to  an  officer  in  the  heart  of  a 
foreign  country  in  a  state  of  war. ' '  No 
instructions  were  given  him  and  none 
were  asked.  He  was  told  to  deliver  a 
message.  He  accepted  the  gage  and  did 
so.  In  a  less  dramatic  sence  that 
is  the  duty  of  an  employee  to  his 
employer. 

CUSTOMER,  taken  as  a 
type,  is  entitled  to  the  closest 
study.  A  credit-man  must 
know  his  life,  must  know  his  en- 
vironments, must  know  his  disposition, 
and  must  enter  almost  completely  into 
his  secret  thoughts.  The  same  rule  of 
action  can  not  be  laid  down  for  all 
customers,  but  there  can  be  a  general 
law  that  applies  to  all.  A  customer 
must  be  treated  with  perfect  frankness. 


62     THE     MAKING    OF    A     MERCHANT 

He  must  be  listened  to  with  patience. 
He  must  be  advised  sincerely.  He  must 
be  encouraged,  and  he  must  feel  that  the 
credit-man  is  his  friend.  The  customer 
who  will  not  yield  to  frankness  with  a  cred- 
it-man is  entitled  to  suspicion.  The  cus- 
tomer who  resents  the  advice  of  the  credit- 
man  is  unwise.  Without  the  customer 
the  credit-man  would  have  no  business. 
Without  the  credit-man,  the  customer 
would  have  no  credit.  They  must  be  close 
together,  confiding,  and  sympathetic. 

The  duty  of  the  credit-man  to  the 
customer  may  involve  the  question  of 
the  concealment  of  certain  details  of  his 
business,  or  moral  life,  that  if 
known,  while  it  would  warn  others 
parhaps  entitled  to  the  knowledge,  would 
ruin  the  customer.  Here  is  a  situation 
wherein  the  credit-man  becomes  the 
judge  of  moral  equity.  He  must 
determine  which  is  the  greater  duty,  to 
protect  individuals,  or  to  protect  the 
community.  No  more  trying  position 
can  come  to  any  man,  and  yet  it  comes 
often  to  the  credit-man. 


THE          CREDIT    -MAN        63 

The  qualifications  of  a  well  equipped 
credit-man  come  to  him  only  through 
experience.  He  should  have  a  knowledge 
of  all  the  circumstances  and  conditions 
that  surround  his  customer.  He  should 
be  familiar  with  the  community  in  which 
this  customer  lives,  should  be  informed 
of  every  industry  on  which  the  customer 
relies  for  the  support  of  his  business.  It 
is  extremely  important  that  he  should 
know  whether  the  sources  from  which 
the  customer  derives  his  support  are  in 
a  prosperous  and  healthy  condition,  or 
whether  the  reverse  obtains. 

To  this  knowledge  should  be  added 
the  complete  understanding  of  the 
condition  of  the  customer's  affairs,  which 
can  best  be  obtained  definitely  by  actual 
contract  with  the  customer  himself.  The 
credit-man  should  have  an  opportunity 
to  look  into  the  customer's  face  at  as 
frequent  intervals  as  possible,  and  to 
confer  with  him  with  reference  not  only 
to  his  own  affairs,  but  to  the  conditions 
that  surround  him.  Equipped  with  this 
information,  he  will  at  all  times  be  in  a 


64    THE     MAKING    OF    A     MERCHANT 

position  to  advise  the  customer,  and  to 
check  him  if  inclined  to  overbuy  or  strain 
his  credit.  He  will  be  in  a  position  to 
favor  the  customer  if  he  requires 
additional  time,  or  accommodation  of 
any  kind.  It  is  as  much  the  duty  of  the 
credit- man  to  furnish  advice  and 
counsel,  as  it  is  to  dispence  credit.  It 
should,  of  course,  be  done  in  a  way  that 
will  not  offend,  but  be  inspired  by  a 
desire  to  assist  the  customer,  and  to  give 
him  the  benefit  of  his  judgment  and 
experience.  A  word  of  advice  given  at 
the  proper  time  will  save  many  a 
customer  from  ruin  and  make  him  a 
prosperous  merchant. 


PRACTICE  that  makes  the 
giving  of  credit  very  difficult 
is  the  custom  now  so  pre- 
valent of  making  sales  through 
traveling  salesmen.  The  credit-man  in 
such  cases  very  seldom  comes  in  contact 
with  his  customer,  and  can  not  so 
thoroughly  inform  himself  as  to  his 
worth,  and  he  must  in  consequence  take 


THE          CREDIT-MAN        65 

a  larger  risk  in    extending   credit.     He 

relies  too  much  upon  the  traveling 
man,  who,  in  his  eagerness  to  make 
sales,  fails  to  give  the  credit-man  a 
proper  understanding  of  the  situation, 
and  it  not  infrequently  occurs  that 
information  is  in  his  possession  which  he 
withholds,  hoping  doubtless  that  a 
favorable  turn  will  enable  the  customer 
to  overcome  the  difficulty  without  its 
being  brought  to  the  attention  of  the 
credit-man.  The  peculiarities  of  the 
salesman,  upon  whom  the  credit-man 
must  of  necessity  depend  more  or  less 
for  his  information,  must  be  studied  and 
thoroughly  known,  in  order  that  he  may 
know  to  what  extent  he  himself  is  being 
aided.  For  instance,  the  salesman 
having  full  knowledge  of  the  peculiarities 
of  his  customer  and  the  conditions 
surrounding  him  and  his  business,  can 
always  judge  as  to  whether  the  customer 
buys  judiciously  or  recklessly.  The 
salesman  can  always  be  of  great 
assistance  if  he  is  thoughtful,  observing, 
and  promptly  reports  the  results  of  his 


66    THE     MAKING    OF    A    MERCHANT 

observations     and     knowledge    to    the 
credit  department. 


HE  credit-man  should  be 
familiar  with  the  collection 
laws  of  the  several  States 
in  which  his  customers  reside,  as 
they  have  much  to  do  with  the  collection 
of  the  accounts  which  he  makes.  He 
should  also  personally  supervise  the 
collections,  and  require  the  customer  to 
pay  at  maturity,  or,  failing  to  do 
so,  exact  a  satisfactory  reason  for 
non-payment. 

The  credit- man  should  learn  to  rely 
upon  himself  and  his  own  investigations, 
using  such  collateral  agencies  as  will 
assist  him  in  corroborating  such  inform- 
ation as  he  may  be  able  to  gather  from 
the  customer  direct,  and  from  his  own 
experience. 

It  is  also  better  for  him  to  rely  upon 
one  man  whom  he  knows  all  about, 
rather  than  trust  two  or  three  with 
imperfect  information  as  to  their 
character,  worth  and  business  methods, 


THE          CREDIT-MAN        67 

for  he  will,  without  doubt,  having  full 
knowledge  of  the  one  man,  grant  him 
credit  in  consistent  amounts,  if  at  all; 
whereas,  with  two  or  three  persons  he  is 
liable  to  err — for,  he  argues,  that  with 
two  or  three,  one  out  of  the  number  will 
prove  to  be  good  in  case  disaster  over- 
takes the  others.  The  wise  credit-man 
can  easily  foresee  the  honest  failure,  and 
can  avert  it  by  warning  the  customer,  or 
by  assisting  him  with  his  council  and 
the  extending  of  judicious  credit.  The 
dishonest  debtor  should  never,  under 
any  circumstances,  be  compromised 
with.  He  should  be  compelled  to  pay 
in  full,  or  be  driven  out  of  business  by  a 
refusal  to  settle  with  him  at  less  than 
one  hundred  cents. 

The  credit-man's  duty  to  himself  is 
perhaps  the  least  important  of  the 
considerations  I  am  giving  thought  to 
this  evening.  He  must  thoroughly 
appreciate  how  potent  a  factor  for  good 
or  bad  he  is  in  relation  to  the  sphere  he 
occupies.  A  disposition  to  become 
arbitrary  or  dictatorial  must  be  closely 


68    THE     MAKING    OF    A    MERCHANT 

watched.  The  compliments  and  flatteries 
and  sophistries  of  those  with  whom  he 
is  brought  in  contact  must  pass 
unnoticed. 

Without  being  a  cynic  he  must  be 
worldwise.  He  must  so  fashion  his 
conscience  that  the  person  upon  whose 
case  he  must  pass  judgment  comes  to 
him  absolutely  without  prejudice,  and 
he  must  conduct  his  reasoning  without 
the  influence  that  would  seek  to  help 
without  merit,  or  to  discourage  without 
cause. 


|HE  home  is  the  cynosure 
of  every  man's  affections. 
Most  men  who  have 
achieved,  or  hope  to  achieve, 
a  place  among  manly  men 
stand  each  at  the  center  of  a  group 
of  loved  dependents  looking  to  him  as 
the  fountain  of  perennial  blessings,  the 
sure  defense  against  threatening  adver- 
sity. He  is  the  chief  corner-stone  of 
that  home,  which  is  the  growing 
banyan  tree;  the  sure  reliance  of  that 
wife  who  once  in  the  glamour  of  love's 
young  dream  with  all  his  worldly  goods 
he  did  endow;  the  worthy  exemplar 
towards  whom  turns  the  gaze,  as  of  the 
sunflower  to  the  sun,  of  the  cluster  of 
sweet  olives  about  his  table,  the  full 
fruition  of  whose  young  lives  is  his 

69 


70    THE     MAKING    OF    A     MERCHANT 

dearest  hope;  the  stalwart  stay  that 
steadies  the  trembling  steps  of  those 
parents  whose  pathway  in  the  gloaming 
it  is  his  daily  joy  to  sooth  and  beautify. 
In  his  peaceful  abode  there  is 
evidence  of  comfort,  prosperity,  affluence. 
The  avenues  of  his  life  have  been  wisely 
chosen ;  his  purposes  are  commendable  ; 
his  plans  are  ripening;  he  runs  well,  but 
the  goal  is  not  yet  reached.  Let  him 
but  pass  this  crisis  in  his  affairs,  win 
this  impending  conflict,  and  competence, 
hope's  alluring  prize,  is  secured.  But 
his  argosies,  scattered  upon  treacherous 
seas  may  disappoint.  Danger  lurks 
about  every  venture.  How  much 
depends  upon  a  single  life!  To  many 
there  comes  a  day  of  anguish,  a  night  of 
tears,  and  in  the  silent  tomb,  the  great 
throbbing,  loving  heart  rests.  How 
often  is  the  anguish  of  this  solemn  hour 
embittered  by  the  consciousness  that 
the  mainstay  of  those  who  relied  upon  the 
strength  of  this  arm,  the  wisdom  of  this 
brain,  the  love  of  this  heart,  is  broken, 
and  that  for  the  loved  ones  will  begin  a 


LIFE  INSURANCE        71 

new   life,    a  life  of   penury  and  distress. 

The  wise  seaman  protects  with 
every  known  device  the  lives  of  those 
who  go  down  with  him  to  the  sea. 
The  wise  husband  and  father  protects 
the  fortunes  of  those  who  sail  with  him 
amid  the  rocks  and  shallows  of  life's 
uncharted  sea.  The  man  who  buys 
insurance  buys  it  not  for  himself;  he 
knows  it  will  not  ward  off  the  destroy- 
ing arrow  that  will  surely  some  day 
reach  its  mark;  he  buys  protection  for 
those  he  loves  better  than  life  from 
dangers  that  he  fears  worse  than  death. 

Knowing,  then,  that  such  protec- 
tion lies  within  his  reach,  the  wise  man 
reckons  it  his  imperative  duty  to  avail 
himself  of  this  great  defense. 


HERE  is  another  phase  of  this 
subject.  Misfortune  does  not 
always  wait  to  follow  in  the 
footsteps  of  death.  For  multitudes, 
success  is  but  an  illusion  that  skips  before 
one  like  the  ignis  fatuus  of  the  fable. 
The  wealth  these  pursue  lies  in  ponder- 


72    THE     MAKING    OF    A    MERCHANT 

ous  chests  at  the  foot  of  the  vanishing 
rainbow.  It  has  been  said  that  ninety- 
five  per  cent,  of  those  who  seem  to  pros- 
per fairly  in  their  lives,  die  paupers  at 
the  close;  they  have  expended  their  estate 
and  are  dependent  upon  the  kind  offices 
of  their  children  or  friends.  It  has  been 
said  of  those  who  undertake  this  very 
business  of  life  insurance  that  not  more 
than  two  per  cent,  succeed.  Old  men 
have  no  longer  toleration  in  this  world. 
The  business  world  has  no  further  use 
for  them.  The  adage  that  a  man  is  no 
older  than  he  feels  rings  false.  Men  are 
no  longer  current  at  this  valuation. 
People  recognize  the  fact  for  others  long 
before  they  are  willing  to  admit  it  for 
themselves.  By  the  time  a  man  has 
reached  the  Methusalaian  age  of  sixty 
his  children,  if  they  have  escaped  the 
infantile  diseases  of  mumps  and  measles, 
and  the  mid-life  insanities  of  golf  and 
foot-ball,  will  have  grown  to  the  estate 
of  manhood  and  womanhood  and  will 
have  outgrown  the  need  of  paternal 
care.  But  the  man  himself  has  begun 


LIFE  INSURANCE        73 

to  descend  the  declivity.  Like  the  old 
man  in  Cole's  most  impressive  picture, 
he  sits  in  his  dismantled  bark,  floating 
on  the  estuary  of  the  stream  whose 
current  will  soon  deliver  him  beyond  .the 
impenetrable  and  eternal  mist.  Happy, 
financially,  will  he  be  who,  with  wise 
forethought,  has  converted  some  of  the 
earnings  that  came  and  went  so  freely 
while  he  was  running  the  rapids  of  youth 
and  middle  life  into  an  endowment  large 
enough  to  provide  for  the  less  exacting 
requirements  of  his  declining  years.  The 
insurance  which  would  have  provided 
for  his  family  had  he  passed  away  while 
they  were  dependent  upon  his  care,  will 
provide  for  himself  during  the  probation 
of  his  old  age.  / 


HESE  provisions  against  the 
misfortune  of  the  family  be- 
cause deprived  of  its  natural 
support,  or  against  the  want  which 
may  accompany  one's  declining  years, 
may  also  be  designated  as  business 
precautions,  since  they  are  adopted 


74     THE     MAKING    OP    A     MERCHANT 

by  far-seeing  men  of  affairs  who 
understand  the  wisdom  of  ,  fore- 
stalling contingencies — as  we  say  in 
Chicago,  of  taking  no  chances.  Others 
purchase  life  insurance  as  a  form  of 
investment.  The  fact  that  the  invest- 
ment has  a  long  time  in  which  to 
mature,  or  if  maturing  earlier,  does  so 
in  a  way  to  deprive  the  investor  of  a 
personal  enjoyment  of  the  avails,  does 
not  act  as  a  discouragement  to  such  as 
seek  security  and  a  form  of  wealth  not 
easily  disturbed.  He  may  indeed,  real- 
ize, but  the  returns  are  so  small  when 
contrasted  with  the  promise  of  later 
benefits,  that  he  usually  prefers  to  let 
time  have  its  cumulative  effect.  There 
are  several  good  things  about  this  form 
of  investment.  It  in  so  far  obeys  the 
injunction  of  scripture — if  your  company 
be  wisely  chosen — as  to  put  your  treas- 
ure where  moth  and  rust  will  not 
corrupt;  it  provides  for  your  own 
household,  who  doth  not  is  worse  than 
an  infidel,  or  for  your  other  self,  and  it 
is  charitable  to  the  needy  and,  perhaps, 


LIFE  INSURANCE        75 

worthy  agent.  But  to  many  this  con- 
stantly recurring  withdrawal  of  capital 
that  might  remain  active  and  flinging  it 
into  the  unknown  hereafter,  with  the 
certainty  that  the  insured  will  never 
enjoy  the  fruits  of  his  forethought 
has  its  depressing  aspect.  When  one 
invests  his  money  in  a  security  bearing 
coupons  he  has  at  least  the  luxury  of 
cutting  off  and  using  or  reinvesting  the 
periodic  returns.  He  gets  no  such  satis- 
faction from  life  insurance,  which  is,  to 
all  intents  and  purposes,  a  dead  issue. 

EVERTHELESS,  there  is  a 
real  retroactive  benefit  to  a 
mans  business  that  grows  out 
of  the  knowledge  that  he  carries  a 
reasonably  strong  line  of  life  insurance. 
Next  to  capital,  the  most 
important  factor  in  a  business  man's 
prosperity  is  credit.  By  credit  I  mean 
something  more  than  simply  the  ability 
to  borrow  on  the  market  at  a  stipulated 
rate  per  cent.  I  mean  that  larger 
consideration  called  confidence.  Confi- 


76    THE     MAKING    OF    A    MERCHANT 

dence  is  a  most  sensitive  plant.  It 
shrinks  before  the  chilling  frost  of 
distrust,  and  under  the  fierce  blast  of 
heated  controversy.  Confidence  begets 
commercial  credit;  it  is  born  of  integrity 
and  capacity.  He  who  seeks  credit  has 
persuaded  himself  that  he  has  such  a 
use  for  the  proceeds  of  his  credit  as  will 
return  the  loan  with  certain  increases 
for  himself.  If  no  man  were  to  buy 
more  than  he  has  the  ready  cash  to  pay 
for,  or  borrow  more  than  the  aggregate 
of  his  visible  means,  a  good  deal  of 
remunerative  business  would  cease.  It 
is  well  to  inquire  as  to  the  borrower's 
property,  and  its  incumbrance,  but  a 
question  of  far  greater  moment  is  as  to 
his  integrity.  Does  the  man  hold  to  the 
sacredness  of  his  word  and  the  in- 
violability of  a  contract?  Does  he 
intend  to  discharge  his  obligations  in 
good  faith,  or  does  he  mean  to  escape 
from  their  entanglements  if  he  can  evade 
the  law?  A  strong  presumption  that  a 
man  means  to  redeem  his  obligations 
follows  the  evidence  that  he  has  pro- 


LIFE  INSURANCE        77 

vided,  or  is  providing,  the  resources  for 
such  redemption,  reaching  even  beyond 
thecontingencies  of  his  own  life— for  death 
wipes  out  many  scores — and  so  it  is  true 
that  a  well  established  line  of  life  insurance 
helps  to  strengthen  the  confidence  which 
a  man's  creditors  have  in  his  integrity. 
Capability  also  begets  confidence.  One 
may  have  property  as  well  as  probity,  but 
has  he  that  quality  of  business  capacity 
which  will  protect  the  property  which  he 
holds  and  will  help  him  to  carry  his  enter- 
prise to  a  successful  issue?  The  honest 
man  who  lacks  capacity  will  go  to  the  wall 
much  sooner  than  the  man  of  question- 
able integrity  who  understands  all  the 
methods  of  self -protect  ion  and  self- 
aggrandizement.  The  fact  that  one  has 
had  the  wisdom  to  secure  an  ample  sup- 
port for  his  family  in  the  manner  due  to 
their  station  in  life,  satisfaction  for  the 
wants  of  his  own  declining  years,  and 
indemnity  for  his  creditors,  even  when  he 
has  passed  out  of  the  sphereof  their  vision, 
goes  far  to  show  that  he  is  sound,  in  judg- 
ment as  in  honesty,  and  that  he  can  be 
trusted. 


78    THE     MAKING    OF    A     MERCHANT 

[E  all  have  personal  knowl- 
edge of  many  instances  that 
prove  the  wisdom  of  life 
insurance.  In  fact  they  are  so  com- 
mon that  I  hardly  feel  justified  in 
giving  you  a  single  case  in  my  own 
experience.  A  number  of  years  ago,  at 
the  close  of  a  busy  day,  I  went  to  the 
West  Side  to  find  a  minister  before  whom 
I  had  once  stood  to  take  the  marriage 
vow.  I  found  him  and  his  wife  alone  in 
meager  quarters,  both  sick  and  without 
means  or  income,  and  apparently 
friendless.  Their  children  had  grown 
up,  drifted  away  and  were  unable  to 
help.  The  good  man,  as  I  approached 
his  bed  and  he  became  aware  of  my 
presence,  said  in  a  feeble  but  confident 
tone:  "I  had  just  closed  my  eyes  and 
said,  'The  Lord  is  my  Shepherd,  I  shall 
not  want. '  It  is  not  proper  for  me  to 
speak  further  of  what  followed,  except 
that  they  were  kindly  cared  for.  Both 
regained  a  measure  of  health  and  lived  a 
number  of  years,  so  that  when  the  good 
man  passed  to  his  reward  I  found  that 


LIFE  INSURANCE        79 

he  owed  me  over  five  thousand  dollars 
advanced  for  maintenance  and  for 
premiums  on  a  ten  thousand  dollar 
policy  in  a  company  represented  at  this 
table.  The  amount  was  paid  promptly, 
my  money  was  returned,  and  the 
residue  maintained  the  widow  until  her 
death  and  still  left  over  three  thousand 
dollars  to  be  sent  to  three  daughters  in 
distant  states,  and  yonder  at  Evanston, 
in  a  Memorial  hall  is  a  window  with  the 
name  of  the  good  man  and  under  it, 
"The  Lord  is  my  Shepherd,  I  shall  not 
want." 

Delivered  at  the  Thanksgiving-  meeting  of  the  Life  Underwriters' 
Association  of  Chicago  in  1899. 


FIRE      INSURANCE 


N  passing  my  life,  or  the 
portion  so  far  allotted  to 
me,  exclusively  in  com- 
merce, during  all  of  which 
time  insurance  against  fire 
has  been  as  ordinary  as  a  system  of 
currency,  I  have  of  necessity  been  awake 
to  the  importance  of  insurance  to  the 
business  world.  In  considering  the 
topic  assigned  to  me,  I  have  brought 
home  to  myself  its  potency  as  a 
commercial  factor,  and  I  am  amazed  at 
its  fundamental  nature.  As  a  matter 
of  fact,  it  would  be  impossible  to  carry 
on  business  without  insurance  against 
loss  by  fire.  It  would  so  disturb  values 
of  all  property  that  it  would  materially 
interfere  with  the  loaning  of  money,  while 

Delivered  at  the  Twenty-Eighth   Annual   Meeting1  of  the  Fire 
Underwriters' Association  of  the  Northwest,  Chicago,  October  1897. 
80 


FIRE  INSURANCE        81 

credits,  which  are  such  a  vast  aid 
now,  would  be  almost  impossible.  It 
would  practically  reduce  trade  to  a  cash 
basis  and  limit  the  volume  of  business 
almost  to  stagnation. 

From  a  realization  of  the  prime 
necessity  of  insurance,  consideration  of 
the  subject  naturally  leads  me  to  think 
of  the  vastness  of  it  as  a  branch  of 
trade,  as  a  great  division  of  our 
commercial  system,  and  then  naturally 
follows  an  inquiry  as  to  whether  so  great 
a  factor  in  our  business  life  is  controlled 
and  directed  wisely  and  with  proper 
regard  for  the  moral  and  financial 
welfare  of  the  people.  Thus,  in  a 
moment  I  find  myself  confronted  by  a 
great  business  problem,  involving  a 
matter  of  the  greatest  importance  to 
myself  and  every  other  business  man,  and 
yet  a  question  to  which  I  have  hardly 
given  a  moment's  thought  during  the 
forty  years  I  have  employed  its  privileges 
and  enjoyed  its  protection.  Occasions 
of  this  character  are  forceful  agencies  in 
the  education  of  busy  men,  and  I 


82    THE     MAKING    OF    A    MERCHANT 

appreciate  in  this  instance  the  value  of 
these  meetings  in  concentrating 
thought,  bringing  out  the  results  of 
experience  and  in  stimulating  high 
resolve. 


AM  aware,  of  course,  that 
the  insurance  interests  of  this 
country  are  thoroughly  or- 
ganized with  various  boards  and 
committees  and  commissions;  that 
there  is  state  supervision  in  the 
different  commonwealths,  and  that  the 
idea  of  national  control  has  been 
considerably  agitated;  but  I  have  yet  to 
learn  that  the  great  mass  of  people  who 
employ  insurance,  the  extensive  property 
interests  that  are  covered  by  insurance, 
have  devoted  any  attention  to  the 
theory  or  the  practice  of  insurance,  or 
have  considered  it  a  public  question.  I 
do  not  find  either  that  economic  writers 
have  taken  up  the  subject  in  discussing 
problems  in  which  insurance  is  so 
intimately  and  essentially  involved.  It 
is  possible  to  regulate  a  thing  too 


FIRE  INSURANCE        83 

much.  It  is  possible  to  agitate  a  subject 
too  much.  It  is  well  perhaps  to  let  well 
enough  alone;  but  in  my  own  behalf  I 
feel  culpable  in  my  ignorance  of  the 
question  now  under  discussion,  and  I 
feel  grateful  that  I  have  been  compelled 
to  bring  myself  to  a  realization  of  my 
deficiency  in  this  regard. 

In  how  far  insurance  interests  are 
responsible  for  the  ignorance  of  the 
people  of  this  important  economic 
question,  I  will  not  pretend  to  say.  In 
extending  credit  to  merchants,  I  am 
constantly  considering  questions  con- 
cerning a  customer's  fire  insurance.  His 
statement  of  his  assets  would  not  be 
complete  if  it  did  not  set  forth  the 
amount  of  insurance  carried,  the 
character  of  the  companies  as  well  as  the 
kind  of  building  occupied  and  its  environ- 
ment. It  is  to  me  a  note  of  warning  if 
I  find  a  customer  either  over  or  under 
insured.  If  he  is  over-insured,  I  am 
thinking  of  the  moral  hazard  to  me  in 
extending  credit  to  him.  If  he  is  under- 
insured,  I  am  thinking  of  the  business 


84     THE     MAKING    OF    A     MERCHANT 

hazard  in  extending  credit  to  him.  I 
always  take  the  liberty  of  cautioning 
customers  who  even  temporarily  carry 
over-insurance.  Some  business  men  in 
good  faith  carry  a  certain  amount  of  in- 
surance through  the  year.  When  the 
stock  is  depleted  by  sales  between  pur- 
chasing periods,  I  maintain  that  if  only 
for  a  month  the  amount  of  insurance 
should  be  reduced.  I  frequently  find  a 
customer  or  would-be  customer  without 
insurance  arguing  that  he  has  a  right  to 
insure  himself,  sometimes  because  the 
building  he  occupies  is  isolated  or 
specially  well  constructed,  and  sometimes 
for  the  reason  that  the  buildings  are 
poor  and  the  rate  is  too  high  and  he 
cannot  afford  to  pay  it.  I  have  always 
advised  against  such  a  plan  and  not 
infrequently  have  been  compelled  to 
decline  or  restrict  the  amount  of  credit 
because  the  customer  persisted  in 
carrying  his  own  insurance.  Only  when 
a  firm,  company  or  individual  has  a  large 
number  of  risks  in  different  cities  or 
remote  parts  of  a  large  city  is  he  justified 


FIRE  INSURANCE        85 

in  carrying  his  own  risk,  and  even  then 
I  would  question  my  own  ability  to 
calculate  the  number  of  separate  risks 
one  ought  to  have  to  enable  him  to 
insure  his  own  property,  and  I  would 
therefore  doubt  his  ability  to  figure  it 
out.  The  only  safe  way  is  to  insure, 
and  a  business  that  will  not  enable  a 
man  to  insure  is  not  worth  having  and 
should  be  promptly  discontinued. 

From  the  date  when  assurance  of 
property  against  loss  by  accident  was 
first  undertaken  in  London,  in  1700,  I 
think,  insurance  has  been  considered  by 
many  as  a  speculation  based  upon  certain 
calculations  of  chance  on  the  moral  and 
physical  hazard.  This  was  painfully 
and  injuriously  incorrect.  By  an  ad- 
justment of  premium  percentage  to  an 
estimated  percentage  of  liability  of 
accident  or  design,  as  applied  to  a  certain 
area  or  number  of  cases,  individuals  were 
then  as  now  protected  from  total  loss  of 
property  by  fire  from  a  fund  created  by 
assessment.  It  was  then,  as  it  is  now, 
in  reality  a  mutual  protective  association. 


86    THE     MAKING     OF    A    MERCHANT 

That  is  to  say,  the  collective  premiums 
paid  individual  losses  and  the  expenses 
of  carrying  on  and  administering  the 
business  of  the  company.  I  say  that 
notwithstanding  the  company  is  a 
private  concern,  conducted  for  profit  of 
its  shareholders,  the  relations  between 
the  insured  and  the  insurer  are  essentially 
co-operative  and  mutual.  I  decry  the 
spirit  of  sharp  practice  that  is  often 
exhibited  between  the  parties  to  an 
insurance  contract  or  their  representa- 
tives. I  regret  that  there  seems  to  be  a 
moral  antagonism  and  a  suspicion  of  the 
integrity  on  either  side.  It  is  a  common 
belief  that  the  insurance  companies 
escape  every  liability  possible,  and  it  is 
understood  that  the  insurance  agents 
regard  persons  applying  for  insurance 
with  more  or  less  suspicion.  There  is 
fraud  in  insurance  and  I  am  aware  that 
fraud  is  practiced  on  insurance 
companies.  If  it  could  only  be  under- 
stood that  we  were  assuring  one  another 
out  of  the  premiums  paid  by  each  and 
that  the  company  was  simply  our 


FIRE  INSURANCE        87 

agent!  That  is  what  it  amounts  to. 
The  capital  of  the  company  is  for  the 
purpose  of  supplying  temporary 
deficiencies,  for  in  theory  the  premiums 
will  always  more  than  pay  losses  and 
expenses.  Any  plan  of  insurance  should 
be  prudent,  safe  and  simple.  Insurance 
is  to  property  what  shadow  is  to 
substance.  There  is  of  course  a  theory 
of  probability,  but  actuaries  have  so 
carefully  weighed  the  probabilities  that 
"fact"  is  waterlined  in  "theory." 

The  usual  practice  is  for  an  owner 
to  estimate  the  value  of  the  property  to 
be  insured  and  take  out  a  policy  for  the 
amount  or  such  other  less  sum  as  may 
in  his  judgment  be  sufficient.  How 
many  agents  in  granting  insurance 
carefully  estimate  the  value  of  the 
property  and  decline  to  place  any  sum 
on  the  risk  beyond  say  seventy-five  or 
eighty  per  cent,  of  its  value?  How 
many  agents  ask  to  look  at  the  last 
inventory  of  a  stock  of  merchandise,  or 
even  ask  if  one  was  taken?  I  would  not 
insure  a  man  who  did  not  at  least  once 


88    THE     MAKING     OF    A    MERCHANT 

each  year  not  only  take  but  preserve  an 
inventory  in  some  safe  place,  and  also 
keep  an  intelligible  merchandise  account 
subject  to  my  inspection  at  my  pleasure 
as  long  as  my  policy  was  in  force.  Over- 
valuations usually  indicate  fraud  aimed 
either  at  the  insurance  company  or  the 
credit-man.  Companies  should  realize 
as  against  a  little  extra  premium  that  the 
interest  of  the  insured  in  the  preservation 
of  his  property  on  account  of  the  value 
left  to  his  own  risk,  is  a  wonderful 
safeguard  from  loss.  From  these 
generalities,  I  have  allowed  myself  to 
believe  that  a  fire  insurance  agent  has  a 
moral  and  fiduciary  responsibility  that 
he  does  not  always  fully  recognize  and 
obey. 

An  agent  is  of  course  * '  out  for  the 
premium;"  he  wants  a  "big  line."  An 
agent,  however,  who  for  the  sake  of  a 
large  premium  would  permit  or  fail  to 
decline  over-insurance,  or  who  would 
accept  insurance  without  first  scrupul- 
ously affirming  the  integrity  of  the 
proposed  transaction,  is  himself  a  party 


FIRE  INSURANCE        89 

to  fraud  and  unworthy  of  his  position. 
I  suppose  the  agents  dislike  to  give 
offense  by  too  close  scrutiny.  They 
realize  that  what  they  may  refuse  to 
do  some  other  agent  may  consent 
to.  They  understand  that  between  the 
risk  and  the  company  there  is  the 
adjuster;  but  these  condone  nothing. 
The  insured  should  not  be  permitted  to 
pay  premium  on  an  amount  he  cannot 
recover  in  case  of  total  loss.  That  is  a 
fraud  on  a  fraud,  a  sort  of  double-headed 
fraud.  The  agent  should  always  bear 
in  mind  that  the  "amount  of  insurance" 
carried  as  property  is  often  accepted  in 
other  transactions  as  a  basis  of  loan  or 
credit.  Here  is  a  fraud  on  the  public  to 
which  the  agent  lends  himself.  The 
agent  should  and  may  in  a  prescribed 
or  perfunctory  way  consider  the  moral 
character  and  general  reputation  of  an 
applicant  for  insurance.  In  my  opinion 
this  is  a  first  consideration.  If  I  was  an 
agent,  I  would  take  note  of  the 
applicant's  character  and  reputation  as 
well  as  his  financial  responsibility  in  the 


90    THE     MAKING    OF    A    MERCHANT 

same  manner  as  if  I  contemplated  selling 
him  goods  on  credit  or  loaning  him 
money  without  security.  A  man  who 
tempts  another  to  crime  is  himself  a 
criminal;  an  agent  who  permits  an 
applicant  to  insure  for  enough  to  tempt 
a  fire  to  break  out,  is  himself  an 
accessory.  There  is  usually  a  fair  degree 
of  harmony  between  buildings  and 
occupants.  The  best  class  of  merchants 
is  seldom  found  in  the  worst  class  of 
buildings. 

HAVE  been  trying  to  deter- 
mine in  connection  with  this 
subject  the  nature  of  public 
control  I  would  advocate.  For  insurance 
is  a  public  question  in  that  it  has  to 
do  with  the  people  as  a  class  and 
has  become  a  factor  in  our  society.  I 
presume  most  of  the  states  have 
supervision  over  fire  insurance.  This 
supervision  cannot  be  expected  to  be 
uniform,  and  it  is  probable  that  the 
statute  of  each  state  having  laws 
governing  insurance  are  dissimilar  in  a 


FIRE  INSURANCE        91 

marked  degree.  These  different  re- 
quirements and  methods  and  machinery 
must  impose  on  the  companies  greatly 
enhanced  expenses.  Who  pays  these 
expenses?  The  public.  The  com  panics 
simply  increase  the  rate  to  meet  the 
taxes  and  tolls  and  loss  of  interest  on 
deposits,  and  expenses  growing  out  of 
obedience  to  the  law.  The  public  in- 
creases its  state  or  municipal  revenue  by 
paying  increased  premiums.  Banking 
is  no  more,  is  not  so  much  a  public 
institution,  as  insurance.  Why  not 
nationalize  insurance?  Why  not  pater- 
nalize  insurance?  Why  not  have 
government  supervision,  inspection  of 
companies  and  risks  by  special 
examiners?  It  would  require  some 
machinery,  but  I  doubt  if  the  general 
expense  would  be  greater  than  the 
aggregate  of  the  state  systems,  and  it 
would  at  least  have  the  benefit  of 
uniformity  which  is  always  desirable. 
The  dignity,  responsibility  and  safeguard 
of  the  nation  would  be  associated  with 
and  sponsor  for  the  plans  of  insurance. 


92    THE     MAKING    OF    A    MERCHANT 

An  insurance  policy  would  be  as  good 
as  a  bank-note,  while  infringement  of 
moral  law  would  be  a  violation  of  federal 
statute  with  the  swift  punishment  that 
now  follows  fraudulent  banking. 


HERE  is  the  end  of  this  book  called,  THE 
MAKING  OF  A  MERCHANT  written  by 
HARLOW  N.  HIGINBOTHAM  and  printed 
by  HELEN  BRUNEAU  VAN  VECHTEN 
at  the  PHILOSOPHER  PRESS  which  it 
in  Wausau,  Wisconsin  at  the  Sign  of  the 
Green  Pine  Tree — Finished  this  ninth  day 
of  May  MDCCCC. 


University  of  California 

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